How Fine is the Line between Cost and Quality?

With a possible economic downturn looming, credit fund managers are challenged to find the balance between cost and quality in their middle and back offices. Managing Director Timothy Ruxton breaks down middle and back office essentials for credit fund managers.

In a downturn, issues will inevitably arise, and when these issues are managed by less experienced talent pools, the outcome could be less than desirable. Combine that with sub-optimal technology systems and the impact is compounded dramatically.

Top-notch talent

It has become paramount for fund managers to have access to top-notch talent pools to help mitigate risk. So, what constitutes top-notch talent?

Tim Ruxton explains, “Our teams consist of CFAs, CPAs and MBAs around the world, but that’s not the only thing that gives our clients the most value. The real differentiator is experience.”

“The only way to truly learn about the credit markets is to get your hands dirty and gain that invaluable experience for yourself. The intricacies of these markets aren’t typically covered in university textbooks, which is why our teams with real world experience in the field are an asset to our credit clients as the threat of a downturn amplifies.”

While it’s critical for credit fund managers to have seasoned practitioners in their back and middle office, what’s equally important is that those experts use top-of-the-line technology.

Integrated technology systems

Most technology systems do not stand on their own; they must be integrated with complementary systems in order to maximize results.  This can be challenging to a manager with limited choices based on their strategies.

According to Tim, “Some of the best and most effective technology is what we have developed internally. We look at what is available to offer our clients and if there is nothing on the market that meets their exact needs at the high level they expect, we take it upon ourselves to build it.”

“Our internally-developed CorPro tool, for example, gives clients access to the different lines of business their Alter Domus teams are doing at any given moment. They’re able to search and assemble data in ways most appropriate to their needs.”

Alter Domus’ Agency System, another internally-developed tech solution, has been continuously developed and improved upon for more than seven years based on client needs and market changes. Tim explains that, “by bringing a tool to market that previously did not exist, we’ve become the leading non-bank agent in the United States.”

Downturn or not?

Whether a downturn is on the horizon or the market is flourishing, top-notch talent pools and technology are absolutely critical to credit funds, due to the complicated, hands-on nature of their asset class. Experience working out issues and leveraging integrated, transparent technology is one of the top ways credit fund managers can help to insulate themselves as the economic tides shift.